Seven Questions for Gree’s SVP of Studio Operations, Anil Dharni

Two years ago, Gree’s goal was to become the social network for mobile games in the U.S., similar to what Facebook is for games on the PC.

To do so, the Japanese-based company acquired San Francisco-based OpenFeint and established a U.S. headquarters in the same city. It then purchased Funzio, a mobile game developer, to help make hit games for the platform. In all, it spent $300 million.

But now the company is pulling back on its plans — just a bit.

While Gree is a massive entity in Japan, with $2 billion in annual revenue, its efforts in North America so far have produced much less. The company does not always break out revenue, but in August, it reported that sales in the U.S. totaled $16.9 million in the second quarter.

In the conclusion of a two-year spending spree, Gree announced in December that it was rethinking its platform ambitions and laid off about 25 members of its platform team to focus on mobile game development. I caught up with Anil Dharni, Funzio founder and Gree’s SVP of its studio operations, in San Francisco last week, to better understand where the the company is headed.

Here are some highlights from the conversation:

Why did Gree shut down OpenFeint in the U.S.? Does it no longer believe in the ability to build a network where players can discover games and other people to play with (a.k.a, a mobile platform like Facebook)?

Anil Dharni: We acquired OpenFeint two years ago, when Gree wanted to get into the U.S. It was working with a slew of indie developers, and over the past two years, we learned about the publishing business and the platform business. We’ve solidified our position with developers, so we didn’t need the platform team [in the U.S.] and moved production back to Japan.

So, what’s the status of the platform in the U.S.?

Dharni: It’s just being developed in Japan. It’s in beta [in the U.S.] today. Our learnings from the process is that we don’t want to have a me-too publishing strategy. We have to offer more, like game analytics, consulting, push notifications, game mechanics, etc. We are not ready to release those capabilities today, but we think we can bring it altogether.

The transfer of the platform development to Japan led to the elimination of 25 jobs in the U.S. How many employees do you have today?

There are 400 employees in the San Francisco offices, Dharni said, which are directly across the street from AT&T Park. The company has also opened a Canadian studio in Vancouver, where it has 10 employees. Both offices are hiring.

Crime City is one of the company’s oldest titles (launched in August 2010), and it continues to be in the Top 50 highest-grossing apps today. How does it continue to attract players?

“A lot of people talk about shorter lifespan of games on mobile than on Facebook,” Dharni said. But by working with his Japanese counterparts, they’ve been able to learn how to retain users for longer periods of time and increase the user base. It has required them to release more content and new mechanics inside of the games to keep people coming back.

How is hard-core being defined on mobile?

The more strategy-based the game is, the more hard-core it is, he said. “It means a smaller audience that monetizes better.” Genres may include first-person shooters, role-playing and card games (a popular category in Japan that challenges players to collect a deck of cards by completing a number of mini games). Dharni said that more developers have become focused on hard-core as the cost to acquire a player on mobile has gone up, since they can deliver a return on investment over a longer period of time.

As games become more hard-core, is the cost of developing a game going up?

No, it hasn’t, Dharni said, but the amount of time it takes to launch a game has gotten longer. “We used to launch games without events and other mechanics and then layer them in later. Now, they are included from the time of beta, which means testing the games out for a long time in either Canada or Australia.”

Is Android catching up to the iPhone in terms of revenue?

It is, if you aren’t successful on the iPad, Dharni said. But if you are, then Android is not competitive yet.

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